Twinning the Goals : How Can Promoting Shared Prosperity Help to Reduce Global Poverty?

In 2013, the World Bank adopted two goals: First, reduce global extreme poverty to 3 percent by 2030. Second, promote shared prosperity defined as the income growth of the bottom 40 percent of the population within a country. This paper simulates t...

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Bibliographic Details
Main Authors:	Lakner, Christoph, Negre, Mario, Prydz, Espen Beer
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank Group, Washington, DC 2014
Subjects:	ABSOLUTE TERMS AVERAGE GROWTH AVERAGE INCOME CHANGES IN POVERTY CONSUMPTION EXPENDITURE CONSUMPTION PER CAPITA COUNTRY INEQUALITY CUMULATIVE POPULATION DENSITY FUNCTION DEVELOPING COUNTRIES DEVELOPING WORLD DEVELOPMENT ECONOMICS DEVELOPMENT POLICY DEVELOPMENT REPORT DEVELOPMENT RESEARCH DISTRIBUTIONAL CHANGE DISTRIBUTIONAL CHANGES ECONOMIC GROWTH ECONOMIC INEQUALITY ECONOMICS LETTERS EMPIRICAL EVIDENCE EXTREME POVERTY FIRST YEAR FUNCTIONAL FORM GINI COEFFICIENT GLOBAL POVERTY GLOBAL POVERTY TARGET GROUP MEANS GROWTH RATE GROWTH RATES GROWTH SHORTFALL GROWTH SPELLS HEADCOUNT RATIO HIGH GROWTH HIGH INCOME COUNTRIES HIGH INEQUALITY HISTORICAL DATA HISTORICAL GROWTH HOUSEHOLD INCOME INCOME DISTRIBUTION INCOME DISTRIBUTIONS INCOME GAINS INCOME GROWTH INCOME INEQUALITY INCOME SHARE INCOME SHARES INCOMES INEQUALITY FALLS MEAN GROWTH MEAN INCOME MEASUREMENT PROBLEMS MEDIUM TERM NATIONAL ACCOUNTS NEGATIVE GROWTH NET EFFECT OBSERVED GROWTH PER CAPITA GROWTH PER CAPITA INCOME POLICY DISCUSSIONS POLICY RESEARCH POOR PEOPLE POSITIVE GROWTH POVERTY ASSESSMENT POVERTY DATA POVERTY ESTIMATES POVERTY GAP POVERTY HEADCOUNT POVERTY IMPACT POVERTY LINE POVERTY LINES POVERTY MEASUREMENT POVERTY RATE POVERTY RATES POVERTY REDUCTION PRO-POOR PRO-POOR GROWTH RAPID GROWTH REDISTRIBUTIVE EFFECTS REDUCTION IN POVERTY REGIONAL LEVEL REGIONAL POVERTY RELATIVE GAINS RICH COUNTRIES STANDARD DEVIATION WELFARE INDICATORS
Online Access:	http://documents.worldbank.org/curated/en/2014/11/20377179/twinning-goals-can-promoting-shared-prosperity-help-reduce-global-poverty http://hdl.handle.net/10986/20611

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Summary:	In 2013, the World Bank adopted two goals: First, reduce global extreme poverty to 3 percent by 2030. Second, promote shared prosperity defined as the income growth of the bottom 40 percent of the population within a country. This paper simulates the global poverty headcount under three growth scenarios for the bottom 40 percent up to 2030. The analysis deploys a set of "shared prosperity premiums," in which the bottom 40 percent in each country grows at a differential rate from the projected growth in the mean. With no distributional change, the global headcount reaches between 6.7 and 4.7 percent in 2030, depending on the average growth scenario used for the simulations. However, if the incomes of the bottom 40 percent grow 2 percentage points faster than the mean, the World Bank's poverty goal is achieved with the global poverty falling to below 3 percent in 2030 in the scenarios which average growth rates are extrapolated from the early 2000s. While such a "shared prosperity premium" is not unprecedented in recent growth spells, maintaining it over 20 years in every country is optimistic. The paper shows that in the baseline growth scenario, the global poverty rate could either reach the 3 percent target, or be close to 10 percent, depending on the "shared prosperity premium."

Twinning the Goals : How Can Promoting Shared Prosperity Help to Reduce Global Poverty?

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